In today’s fast-changing business environment, employers sometimes need to adjust their workforce. Two terms often used in this context are redundancy and restructure. While they sound similar, they mean different things and the legal implications for employees can be significant.
What Is a Redundancy?
A redundancy happens when an employer no longer requires a particular role to be performed by anyone. It is the position itself that becomes redundant, not the employee. This usually occurs when a business closes, relocates, experiences a downturn in demand, introduces new technology, or takes steps to cut costs.
When a redundancy is genuine, the law requires the employer to consult with affected staff, consider redeployment options, and in most cases pay redundancy entitlements. Employers with fewer than 15 employees may be exempt from paying redundancy, but larger organisations must comply with the redundancy pay provisions under the Fair Work Act 2009. If the process is not followed correctly, the redundancy may be challenged as not genuine, which could expose the employer to claims for unfair dismissal or general protections.
What Is a Restructure?
A restructure, on the other hand, refers to changes in how a business is organised or operates. This might involve merging departments, shifting responsibilities, or changing reporting lines. A restructure can lead to roles being abolished, but it can also mean existing positions are altered or new ones are created.
For employees, a restructure does not always mean job loss. In some cases, staff are offered redeployment into another role, asked to apply for newly established positions, or given updated duties under a revised contract. While a restructure can lead to redundancies, it is not the same thing.
The Legal Distinction
The key difference is that redundancy is about the role no longer being required at all, whereas a restructure is about the organisation changing how it operates. For employees, this difference matters because redundancy usually carries an entitlement to severance pay, while a restructure may simply change the nature of their role without any entitlement to a payout.
When Disputes Arise
Tension can occur when employers label a termination as part of a restructure in order to avoid paying redundancy. If the “new” role looks almost identical to the old one, the Fair Work Commission may find that the redundancy was not genuine. Employees in this situation may be able to challenge the decision as an unfair dismissal.
How We Can Help
Redundancy and restructure are common realities in the modern workplace, but they are not interchangeable. Employees should understand that redundancy generally involves entitlements, while a restructure might simply involve role changes. Employers, meanwhile, must follow the correct legal processes to ensure compliance and avoid disputes.
At NB Employment Law, we help employers in navigating these changes fairly and lawfully. If you are facing a redundancy or dealing with a workplace restructure, our team can provide the guidance you need.